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WHAT IS THE GENERAL POLICY OF THE GOVERMENT FOR FOREIGN INVESTMENTS?

The government recognizes the pivotal role of private sector investments and, thereby, commits to continously enhance thebusiness climate. Foreign investments are encouraged to fill in capital gaps, help provide employment, increase production, and provide a base for the overall development of the economy. Investment rules and regulations have thus been liberalized to facilitate entry of foreign investments.

Who may invest?

Anyone, regardless of nationality, is welcome to invest in the Philippines. With the liberalization of the foreign investment law, 100% foreign equity may be allowed in all areas of investment except those reserved for Filipinos by mandate of the Philippine Constitution and existing laws. What requirements must be complied with before a foreign corporation can do business in the Philippines? A foreign corporation must first secure the necessary licenses or registrations from the appropriate government bodies. In the case of corporations or partnerships, the necessary incorporation papers from the Securities and Exchange Commission must first be obtained. In the case of single proprietorship, registration from the Bureau of Trade Regulation & Consumer Protection of the Department of Trade and Industry must be secured.

Are foreigners allowed to lease land?

Foreign investors investing in the Philippines can now lease private lands up to 75 years. Based on R.A. No. 7652, entitled “Investor’s Lease Act”, lease agreements may be entered into with Filipino landowners. Lease period is 50 years, renewable once for another 25 years. For tourism projects, the lease shall be limited to projects with an investment of not less than US$5M, 70% of which shall be infused in said project within 3 years from signing of the lease contract. For more information download our Primer on Tourism Investment in the Philippines

PHILIPPINES VALUE-ADDED: OUR VALUE PROPOSITION

Overview

In line with the Government’s thrust of making Philippines a competitive country in the global environment through various investments, investors, both existing and prospective should be well informed of the economic environment and regulations. Information about the economic environment of the country and industry is essential because it will help investors assess possible opportunities and avoid possible threats at the same time. Regulations, on the other hand, provide the guidelines with which investments must be done.

This Investment Portfolio has been prepared by Financial Advisors Inc. to address prospective foreign investors in the Philippines, particularly in the tourism industry. It aims at providing prospective investors information about the investment climate of the country, costs of doing business, investment procedures, and laws pertaining to tourism and so on. Investment climate on the tourism industry itself is included so investors can gauge if such climate is conducive to their investments. The portfolio brings in together salient facts needed by the investors to not only entice them to invest in the Philippines but also make sure that such investments generate acceptable rate of return to the investors and more importantly, provide socio-economic benefits to the country.

Philippine Advantage

The Philippines, with its strategic location, is a gateway to the huge Asian market. Its considerable attractions as an investment destination include:

A pool of English-speaking people who are highly trainable. Their capabilities and merits as blue-collar workers, technicians, professionals and managers have been confirmed in postings with foreign firms operating in the Philippines and overseas.
A large potential market for consumer goods on account of its fast-growing population. Its ASEAN affiliation provides further opportunities for access to the ASEAN Free Trade Area (AFTA).
The foreign-investor friendly posture of government. It has manifested its commitment to create conditions that attract foreign investments. Liberalized policies and regulations on foreign investments continue to be put in place.
A conducive location for Asia-Pacific expansion programmers & production facilities, further supported by the governments’ grants of fiscal concessions.
The opening of industries previously restricted like the telecommunications industry, transportation, banking, retail trade energy & post extractive petroleum processing & distribution industry, for the participation of foreign investors.
The potential growth construction enterprises can attain in the country because of the implemented build-operate-transfer (BOT) scheme by the government. The said scheme provides for the development opportunity of construction enterprises, investors funding the construction, operates the facility for a fixed term, recover their investments plus adequate rate of return and fees then transfer the facility to the government.
Availability and accessibility of special economic zones and free ports in various parts of the country where infrastructure supports are adequately provided and locators are granted fiscal and non-fiscal incentives.
The competitive edge the information and communications technology (ICT) industry has which includes call centers. The said industry is booming in the country and is generating employment opportunities for local citizens.
A highly developed legal system.

Investment Incentives

Wide incentives are available to foreign investment in activities that significantly contribute to national industrialization and socioeconomic development, and in export-oriented enterprises. It is also available to export oriented enterprises within ecozones administered by PEZA or similar agency.

Income tax holidays of three to eight years are a central feature in most incentive packages.

Enterprises locating in special economic zones may be entitled to a special 5% rate of tax on their gross income (sales less direct costs) in lieu of all other national and local taxes. Enterprises registered under Subic Bay Metropolitan Authority (SBMA), which administers the conversion of US Military based.

DESTINATIONS TO INVEST